Sandhill Inc. has 4 product lines: sour cream, ice cream, yogurt, and butter. Demand of individual products is not affected by changes inother product lines. 30% of the fixed costs are direct, and the other 70% are allocated. Results of June follow:Sour CreamIce CreamYogurtButterTotalUnits sold2,4006004802403,720Revenue$12,000$24,000$12,000$24,000$72,000Variable departmental costs7,20015,6005,0405,76033,600Fixed costs6,0002,4003,6008,40020,400Net income (loss)$(1,200)$6,000$3,360$9,840$18,000Prepare an incremental analysis of the effect of dropping the sour cream product line. (Enter negative amounts using either anegative sign preceding the number e.g. -45 or parentheses e.g. (45).)

The incremental analysis is performed to analyze the effect of decision on the business or its…

Answered: Sandhill Inc. has 4 product lines: sour…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cullumber Farms reports the following results for the month of November: Sales (11,100 units) Variable costs Contribution margin Fixed costs Net income $688,200 477,300 210,900 122,100 $88,800 Management is considering the following independent courses of action to increase net income. 1. Increase selling price by 5% with no change in total variable costs. 2. Reduce variable costs to 66% of sales. 3. Reduce fixed costs by $10,000.
Old Jeans, Incorporated, has two divisions or profit centers, one makes regular fit jeans and the other makes relaxed fit jeans. The information for the two centers for the month of May follows: Regular fit Relaxed fit Sales $ 400,000 $ 175,000 Variable cost (as a % of Sales) 40% 50% Traceable fixed costs $ 40,000 $ 70,000 There are also common fixed costs of $27,500. Required: Prepare a responsibility income statement by profit center and in total.
Bob Co. has two departments: QR, and XY, which produce high quality hockey sticks. The company has provide the following information for the month of April: QR XY Total Sales $ 9,000,000 $ 2,200,000 $ 11,200,000 Variable Costs 4,500,000 950,000 5,450,000 Contribution Margin 4,500,000 1,250,000 5,750,000 Fixed Expenses 3,500,000 1,300,000 4,800,000 Operating Income (Loss) 1,000,000 - 50,000 950,000 Bob Co. has conducted an analysis of the costs involving XY after a poor performance in April and it was determined that the following would occur if the XY department ceased operations: 1. $450,000 in fixed expenses of XY would be eliminated by ceasing operations. The remaining $850,000 are sunk costs that cannot be recovered. 2. The sales in the QR department would increase 13% if XY were to cease operations. REQUIRED A) What would be the effect on operating income if the XY product line is dropped? B) Should the XY product line be dropped? Briefly explain. C) Unrelated to parts A & B of…
C. ABC Company has 3 stores. The following data were made available in March 20X3: Sales Variable Costs Contribution Margin Traceable Controllable Fixed Cost Performance Margin Traceable Non-Controllable Fixed Cost Segment Margin Store 1 650,000 390,000 260,000 80,000 180,000 100,000 80,000 2. Store 2 1,200,000 780,000 420,000 200,000 220,000 120,000 100,000 Store 3 800,000 400,000 400,000 180,000 220,000 110,000 110,000 Additional information: 1. Store 1 is the oldest branch. Stores 1 and 3 are both in a sub-urban area, while Store 2 is the newest branch and is in a highly urbanized city. The company is considering an additional advertising cost for P21,000 to boost sales. The following alternatives are being considered: a. Advertise all the stores which will increase individual store's sales by 5%. b. Advertise Store 1 to increase its sales by P300,000 but will decrease sales of Store 3 by P200,000. REQUIRED: Determine which of the 2 alternatives, a or b, will benefit ABC Company…
Pathways Careers, Inc. has two products-Resume Reader and Cover Letter Cure. Financial data for both the products follow: Resume Cover Letter Reader Cure 2,600 units 1,300 units Units sold Sales price per unit Variable manufacturing cost per unit Sales commission (% of sales) $600 320 6% $1,000 650 4% Pathways has two sales representatives-Curtis Muller and Willow Brown. Each sales representative sold a total of 1,950 units during the month of March. Curtis had a sales mix of 60% Resume Reader and 40% Cover Letter Cure. Willow had a sales mix of 80% Resume Reader and 20% Cover Letter Cure. Based on the above information, calculate Willow's total contribution to company profits. OA. $380,640 O B. $120,900 OC. $501,540 OD. $573,300
McDaniel Inc., a company that produces and sells a single product, has provided its contribution format income statement for January. Sales (4,200 units) Variable expenses Contribution margin H Fixed expenses Net operating income $54,600 $59,800 $69,400 $ O $13,362 $ 155,400 100,800 If the company sells 4,600 units, its total contribution margin should be closest to: 54,600 42,400 12,200
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MAS 1 Company sells 10,000 units of its products to SM Supermarket. Its selling price is P 50 per unit. The details of its costs are as follows: Direct Materials P 6 per unit Direct Labor P 10 per unit Variable Factory Overhead P 4 per unit Fixed Factory Overhead P 150,000 Variable Expenses P 5 per unit Fixed Expenses P 50,000 Assume each questions as independent assumptions: 6. Margin of safety in units 7. Margin of safety ratio 8. Net Profit 9. Contribution margin in pesos
Ramirez Corp. has two customers, C1 and C2. Ramirez Corp currently allocates indirect costs to customers at a rate of 5% of customer revenue. Data for C1 and C2 are as follows: C1 C2 Selling Price per Unit $20.00 $20.00 Units Sold 50,000 12,000 Manufacturing Cost per unit $15.00 $15.00 Number of Purchase Orders 112 27 Number of deliveries 105 68 Number of Inspection 77 50 Customer Visits 40 35 A. Using the current costing system to allocate support costs, calculate Operating Income for customers C1 and C2. Ramirez Corp.'s Management Accountant has gathered the following ABC rate information: ABC Cost Rate Number of purchase orders $40 per purchase order $85 per delivery $200 per expedited delivery Number of deliveries Number of inspections Number of customer visits $400 per customer visit b. Calculate the total support cost allocated to C1 & C2 using the Activity Based Costing (ABC) system. c. Comparing the indirect cost allocated in part a. to the indirect cost allocated in part b.…
Crane Corporation produces and sells two products, Basic and Super. Data for activity during March are as follows: Basic Super Sales $213,000 $263,000 Contribution margin 25% 28% Total fixed costs $78,000 $78,000 Prepare a segment margin income statement. Omit the heading. Common fixed costs of $38,000 are allocated Basic and $43,000 to Super. (If the amount is negative then enter with a negative sign preceding the number, e.g. -5,125 or parenthesis, e.g. (5,125).) Basic Super Total $ $ $ tA
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